Cerrado: Agribusiness boomtown; profits for a few, hardships for many

Luís Eduardo Magalhães (LEM) is a soy boomtown, built on Cerrado agribusiness. Its population has grown fourfold since 2000, to 83,000 people, and is one of Brazil’s fastest growing cities. But LEM has suffered growing pains as the people from rural areas have rushed there seeking jobs and opportunities.

Public services have failed to keep up, with most urban streets still dirt and sanitation services lagging behind population growth. Many new arrivals from the countryside, lacking specialized skills, have been unable to get good jobs or gain access to the highly mechanized and specialized industrial agribusiness economy. So they remain poor.

Many have ended up in Santa Cruz, an impoverished neighborhood where drug trafficking and gang violence are a constant daily threat. Those with better skills and more luck may end up in Jardim Paraíso (Paradise Garden), a nearby upscale neighborhood marked by security fences and security alarms as protection against crime.

Experts say LEM seems likely to follow the path of agribusiness boomtowns globally: population grows rapidly, but initial economic gains and urbanization aren’t followed by ongoing development and investment. Disorderly growth negatively impacts the environment, leading to more poverty and a concentration of land ownership and wealth.

Cargill soy silos are both a symbol and a source of the prosperity of the city of Luis Eduardo Magalhães, Brazil’s latest agribusiness urban hotspot. Photo by Flávia Milhorance

This is the fifth of six stories in a series by journalists Alicia Prager and Flávia Milhorance who travelled to the Cerrado in February for Mongabay to assess the impacts of agribusiness on the region’s environment and people.

In 2000, this Western Bahia city became a soy hub in its own right, emancipating itself from the state’s other soy capital, Barreiras (of which it was once a part). Since then, the population of Luís Eduardo Magalhães (LEM) has increased more than fourfold to 83,000 people, making it one of the fastest growing urban centers in Brazil.

Swelling that population are rural people — fleeing drought or lack of opportunities — along with farmers seeking to prosper by becoming part of the booming agribusiness economy.

Today, Luís Eduardo Magalhães is a national agribusiness powerhouse, with the fourth highest GDP per capita in Bahia state, and ranking 20th in Brazil’s GDP of Agribusiness. Its growth is built almost solely on supplying the agriculture sector, so it is well connected to rural croplands. The highway cutting through the heart of the municipality is brand new, and busy with pickups and big trucks hauling soy, fertilizer and pesticide. The city also boasts seven private airfields, providing easy, fast access to the more remote parts of the countryside for the ruralist elite.

But turning off the highway and onto city streets, we began seeing contradictions and contrasts to all that agro-wealth. Despite its rapid urbanization and economic growth, LEM has mostly dirt streets (mud streets in the wet season), no public spaces, and a visibly precarious sanitation system. The closest public hospital is at Barreiras, 90 kilometers (55 miles) away.

“Luis Eduardo Magalhães is the main Matopiba hub [the collective name for the four Cerrado states of Maranhão, Tocantins, Piauí and Bahia]. It has service infrastructure and international investments, with an institutional apparatus, which is difficult to match in a short time,” says Clóvis Caribé, professor at the State University of Feira de Santana, who researched its rapid development. “The region was transformed, but it happened with a huge misalignment with social and environmental issues.”

Vanishing vegetation might one day curb the boom

Today, Barreiras and Luís Eduardo Magalhães are centrally positioned to take advantage of their roles as goods and services suppliers to the Matopiba agricultural sector. Since 2000, this four-state region, like much of the rest of the Cerrado biome, has been swept up in commodity production expansion, accompanied by a simultaneous, and equally fast paced deforestation trend. The Cerrado is currently losing native vegetation faster than the Amazon.

Agribusiness growth northward is now significantly impacting the Rio de Ondas (Waves River) basin, which encompasses both LEM and Barreiras, a study by Brazilian institutions has found. As of 1984, only 5.3 percent of the basin’s native vegetation had been cleared. Three decades later, the deforested part of the basin reached 48.5 percent, or 2,705 square kilometers (1,044 square miles).

That high deforestation rate is not only of concern to conservationists worried about biodiversity. The Rio de Ondas is an important water resource for both cities — providing drinking water, powering hydroelectric plants, and irrigating the outlying area’s large-scale soy, cotton and corn farms. Deforestation reduces water infiltration and hinders the recharge of the Urucuia aquifer, which then reduces stream levels, according to the Brazilian study.

That ongoing and drastic loss of available water, enhanced by intensifying drought due to escalating climate change, is becoming increasingly important, especially in the dry season, to Barreiras and Luís Eduardo Magalhães. And ultimately, it could turn agricultural boom to bust.

A bicyclist on the streets of Santa Cruz. The farther we travelled into this poor neighborhood the more residents warned us of the dangers. Photo by Alicia Prager

Not everybody’s agribusiness El Dorado

The BR 020 highway runs next to Santa Cruz, the oldest and biggest LEM neighborhood. It is the primary destination of poor migrants, especially from rural areas, who come to the city seeking their soy paradise. Many arriving in Santa Cruz are small farmers looking for job opportunities, but lacking expertise or a way into the mechanized system of crop production.

Today’s Santa Cruz residents face poverty and chronic unemployment. Two years ago, Ernesto José de Souza, 43, left his small farm in Indianópolis, in neighboring Minas Gerais state, hoping for a better life. “I thought I would find more jobs here,” he says. But he never managed to opt into the soy paradise. So he sells popsicles on Santa Cruz streets for R$2 (US$0.60). His wife stayed back home. “It’s even more difficult to find jobs for women,” he says.

Ernesto José de Souza came to LEM in hope of better job opportunities, but he never found work in the agricultural sector. Today, he sells popsicles. Photo by Flávia Milhorance

Jandeilson Rosa da Silva, 36, tells a similar story. He arrived in LEM only five months ago, but difficult times here have already caused him to plan a return to his hometown of Brejo Cruz, Paraíba state, 1,618 kilometers (1,005 miles) away: “Nobody is hiring anymore,” he says.

Silva took out a R$3,000 (US$915) loan to travel to LEM, and rented a R$400 (US$120) house on arrival, which he finds expensive. Therefore, he shares his two-rooms with two friends who took the same migratory gamble with him.

“I really thought that things would be better, but they became worse,” says da Silva, leaning over a pile of tapestry pieces that he has been trying to sell. Instead, he has been collecting debts and dwelling on family memories: “I miss them a lot.” His wife and two children are back in his hometown, and they haven’t seen each other since he moved.

These men weren’t foolish in coming to Luís Eduardo Magalhães. Despite Brazil’s ongoing economic crisis and its high rate of unemployment at 12.2 percent, LEM did offer more new jobs in 2017 than many other parts of the nation. However experts have pointed out that the rapid mechanization of Brazilian agribusiness has resulted in a trend where the sector pays more, but employs less. New technologies have reduced the number of unskilled workers’ positions, and increased the demand for a more specialized workforce.

This is especially true in Western Bahia, where the land is flat, and large tractors, trucks and other big machines can do much of the work, and manual labor is minimally required. “Jobs in modern agriculture are scarce, as people need to speak English, know how to operate big tractors, and how to manage technologies,” says Caribé.

Most urban job openings are in the service sector meeting the demands of agribusiness and transnational commodities companies. In the LEM city center, shop windows advertise farming tools, fertilizers, herbicides, and farm safety equipment.

Drug trafficking and gang conflicts are common on the streets of Luís Eduardo Magalhães. Pedro José Santana’s daughter was almost killed by a drug trafficker. He makes his living by selling sugar cane broth. Photo by Alicia Prager

Violence in the streets

Santa Cruz isn’t just poor. It is nicknamed “Iraq” because of the neighborhood’s high crime rate. Updated statistics for Luís Eduardo Magalhães are lacking, but the local media keeps an annual count of murders. Santa Cruz is at the heart of LEM’s drug trafficking and gang violence.

“My daughter was almost killed by a guy involved in drug trafficking a few years ago,” says Pedro José Santana, 59, who settled in Santa Cruz in 2010.

Small scale food farmer, Santana came to LEM with four children and his wife. He found a job, but also lots of urban stress. “In the countryside, there was no violence,” he explains. Shifting from job-to-job, he is unable to do the hard labor involved in harvesting, and has started selling sugarcane broth.

“There are many killings up there, much trafficking, many kids stealing mobiles,” says Josiane Bezerra, 25, pointing at the long, straight main street of Santa Cruz.

Her family moved here from the rural town of Irecê when she was still a child. Her parents fled the countryside’s long droughts, where hoping for rain did not grow food. Back in the 2000s, so many people came to LEM from this rural semi-arid town in Bahia state that a few stores in the neighborhood are dubbed Irecê today. Josiane’s friend, Ariana Nunes, is the same age and shares the same story. Both work in a low budget clothing store in Santa Cruz.

“I don’t want to move, I like [it] here, I don’t want to work in the countryside. But there isn’t much to do,” says Nunes. With few urban leisure options, the friends treat the surrounding Cerrado as their playground. “There are plenty of waterfalls. We prefer going to Pedras, Alcides, Coqueiros… ,” she starts listing. Water remains plentiful at these green oases, so far.

Josiane Maria Bezerra, Ariana Nunes de Silva, Tatiana Alves (left to right) work in a clothing shop in Luis Eduardo Magalhães. Josiane’s and Ariana’s families came to LEM to escape from the long droughts that made it hard to grow food. Photo by Alicia Prager

Improved social indicators

Despite the poverty and crime, social indicators have improved in LEM. The city has seen an increase in health care availability and education opportunities; the so-called human development Index (HDI) is considered high; and there has been a decrease in inequality, although the level remains at 0.62, higher than the Brazilian inequality index rating of 0.52.

“Regions in Matopiba see agribusiness as the only chance of development they will ever have,” says agronomist Fernando Sampaio, executive-director of a Mato Grosso state project known as Strategy of Producing, Conserving and Embracing. “I got to know the South of Piauí [state] and Western Bahia 25 years ago. Where there is agribusiness, money flows, and people live better.”

A study by the research group Climate Policy Initiative found that Matopiba municipalities within the Cerrado (a principle target of agriculture expansion) perform better economically than municipalities located outside the biome. The advance of agribusiness has increased those towns’ per capita GDP by 37 percent, and increased by 10 percent access to durable consumer goods, such as TVs and refrigerators, as well as electricity. But the study reports no improvement in access to water or sewage. In fact, only 18 percent of LEM households have proper sanitation, far below the national average of 43 percent. The municipality recently set up a sewage system in Santa Cruz, but it isn’t working yet.

There are private health clinics in the city, but no public hospital, only smaller public health facilities. A popular local saying used to be that a farmers’ best hospital is the airplane, says Caribé. Today, people who need care take the BR 020 highway to Barreiras, the closest hospital. “Last week an acquaintance died in the middle of the road when heading to the hospital,” Tatiana Alves, 23, told us.

The wealthier neighborhood of Jardim Paraíso (Paradise Garden) is located very close to the impoverished and crime-ridden neighborhood of Santa Cruz. As a result, residents of the upscale neighborhood make a big effort to protect their homes with security fences and security cameras. Photo by Alicia Prager

Difficult development

“I feel intrigued with the increasing social indicators,” as they can be misleading, comments Valney Rigonato from the Federal University of West Bahia, who lives on an unpaved street in Barreiras. “You just need to walk around for a while to perceive [the] predatory development [of the city]. From above they can show one reality, but here you see that we are going the wrong way.”

In both Barreiras and Luís Eduardo Magalhães — though the streets may still be dirt and vegetation scarce — you can also find people leading the good life, thanks to the money flowing in from agribusiness. Next to impoverished Santa Cruz, lies Jardim Paraíso (Paradise Garden), where two-floor homes and pickup trucks are guarded by security cameras and high walls.

However, many seem to understand that this prosperity relies on exportable mono-crops, a boom that could go bust at anytime.

As experts point out, the cities of Western Bahia are being shaped by trends seen elsewhere in the world. Industrial agribusiness, they point out, tends to boost population growth, leading to economic gains and urbanization in rural cities. However, that is not generally followed by ongoing development or further investment. Profits flow out of town, and the cities grow in a disorderly manner, negatively impacting the environment and leading to a concentration of land ownership and wealth, and sometimes reckless speculation. Mongabay contacted the municipality of Luís Eduardo Magalhães several times for comment, but it didn’t respond.

A recent paper that focused on the examples of Luís Eduardo Magalhães and Barreiras points toward increasing segregation within these agribusiness-dominated cities, as the divide widens between poor and well to do. While Jardim Paraíso and other parts of LEM see a real estate boom, Santa Cruz keeps growing informally and precariously as new migrants flow in.

“Luís Eduardo Magalhães is the Wall Street of soybeans,” declares Deusdete Santiago, a former Monsanto company pesticide salesman, who now owns a large farming tools store in Barreiras. “But the big money doesn’t stay here, it goes to Sao Paulo or abroad,” he says. Just like that, the money flows out of the city, and the inhabitants’ hopes for a better future vanishes.

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Today, Luís Eduardo Magalhães profits from industrial agribusiness. But like other such boomtowns around the world, LEM’s economic growth might not last. Photo by Flávia Milhorance